MarketsmithIndia Articles

Nifty Scales New High, Closes Above 13,500; FMCG and PSU Banks Lead

Posted Date: December 11 2020
Weekly Action

Nifty, +1.9%; Sensex, +2.3%; Nifty Midcap, +1.2%; Nifty Smallcap, +1.9%; Model Portfolio, -0.7%.

Market Pulse: Confirmed Uptrend

Distribution Day Count: Three

Weekly Market Review

Nifty continued the last week's momentum and hit a new high for three consecutive days. However, on Thursday, the market was under selling pressure and added a distribution day. Today, Nifty made a new high but remained volatile throughout the session and closed 0.3% higher. Nifty Midcap and Smallcap relatively underperformed the benchmark indices. Nifty is trading 3.5% and 9.0% above its 21- and 50-DMA, respectively. On the sectoral front, Nifty PSU Bank and Metal closed 6–8% higher for the week. Nifty Bank, Energy, IT, and Financial Services closed 1.5–2.0% higher. On the flip side, Nifty Auto and Metal were down 1.2% and 0.5%, respectively.

We maintain a positive view of the overall market as indices trend into new highs with low distribution day count. Further, leadership remains widespread across multiple sectors. We continue to recommend a selective approach to increasing risk. Focus on high-quality ideas emerging from sound bases with an RS line at or near a new high. After a strong rally, pullback/consolidation (if any) is a constructive sign if Nifty holds its short-term moving averages. On the flip side, tracking distribution days is crucial. Accumulation of distribution days can be a sign of market top and halt the uptrend.

What do you think? Please email us any questions or comments.

Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.For more information, see our Legal disclosures here.

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